Incentives for Species

by Brett Schaerer

The Thoreau Institute
14417 S.E. Laurie
Oak Grove, Oregon 97267
April, 1996

Table of Contents

Executive Summary

The clash between environmentalists and private landowners over the fate of endangered species has divided the country on an issue that seemingly pits growth (and jobs) vs. the environment. This does not have to be the case. Protecting endangered species can be integrated with economic growth, turning a win-lose or lose-lose situation into one where everyone benefits.

This can be accomplished by using economic incentives to promote conservation. Sharing the expenses that landowners face in protecting important habitats will turn endangered species from a liability into an asset. This paper explores the various ideas for using incentives that have been proposed, and suggests how they can be effectively employed in the interests of landowners and rare organisms alike.

The incentives that are to be analyzed here include: removing disincentives to conservation, programs encouraging voluntary conservation, a biodiversity trust fund, tax deductions, paying bounties for endangered species and their habitat, bidding for non-use of government lands, contracting recovery efforts, a development-conservation credit scheme, user fees for recreation in natural areas, trading usable public lands for `unusable' private lands, and rewards for reporting criminal offenses to endangered species. Many of these ideas have proven to be successful on a trial basis, and offer hope for large-scale implementation.

This paper recommends that legislation be enacted to encourage the use of incentives which should prove to be a more effective means of protecting imperiled species. Although the costs incurred by these incentives may be high in some cases, they will be highly cost-effective. The current `at any cost' strategy is only marginally effective, and can actually harm species in some circumstances.

Why the Endangered Species Act Doesn't Work and How to Fix It

The Endangered Species Act is a monumental piece of environmental legislation that sets a high priority on preventing extinctions. Some would even say the highest priority. Endangered species conservation in the U.S. has fallen far short of this noble goal. Only about eight species have recovered since the law's inception in 1973 (Stroup 1995, Rohlf 1994). The species listed number well over 1,000, and thousands more await listing in the near future. Clearly, the Endangered Species Act does not accomplish its goal very well; it neither prevents the endangerment of susceptible species, nor does it effectively recover species facing extinction.

There are a number of reason why the current law is inadequate. The burden of saving endangered species in the U.S. falls squarely on the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. These two organizations are vastly understaffed and underfunded for the task they have been given (L. McKinney 1993, Opdycke 1993). Consequently, most of their efforts are devoted to protecting endangered species on public land, which they have accomplished fairly well (Reid 1993).

The Fish and Wildlife Service in particular has been unsuccessful and at times counter-productive when it comes to protecting endangered species on private lands. Their strategy has been to regulate and restrict the use of private lands with endangered species or their habitat. Landholders, who are forced to comply, have found these orders costly, confusing, authoritarian, and sometimes completely unnecessary. Consequently, landowners generally want nothing to do with the recovery of imperiled species. In some instances, they even go out of their way to harm species by destroying habitat on their land. Given this antagonistic approach, it is no wonder that endangered species continue to be pushed towards the brink of extinction.

Doing More Harm Than Good

The Endangered Species Act unintentionally provides a disincentive to conservation, creating antagonism between private landowners and protected species (and the government that protects them). This attitude seriously undermines recovery efforts, and in some cases, can even result in a net harm to a protected species. About 50 percent of the listed species inhabit private lands (Reid 1993) and many protected species are found exclusively on private land. It goes without saying that private landholders can play a major role in determining the fate of an imperiled species.

The pattern to date has not been hopeful. At best, landowners begrudgingly comply with the regulations (which are often vague and contradictory). At worst, landowners go out of their way to destroy endangered species habitat either before they are listed, or before the Fish and Wildlife Service learns of their existence. Some people even go to the extreme of using the `shoot, shovel, and shut up' method to prevent listed species from inhabiting their lands.

A good example of the harm done to listed species by the law that is supposed to protect them comes from Texas. Near Austin, nine federally protected species inhabit land that has come under intense development pressures. The two most prominent species are the black-capped vireo and golden-cheeked warbler. These birds had significant amounts of habitat on the land slated for development.

To retain `ownership' and the value of their property, many landholders destroyed habitat for the birds prior to their (anticipated) listing. Some owners even did so after the listing, but before the Fish and Wildlife Service had discovered the birds inhabiting the property. Larry McKinney, an official for the Texas Parks and Wildlife Department, goes so far as to say: "While I have no hard evidence to prove it, I am convinced that more habitat for the black-capped vireo, and especially the golden-cheeked warbler, has been lost in those areas of Texas since the listing of these birds than would have been lost without the ESA [Endangered Species Act] at all. Undoubtedly, some landowners unwittingly destroyed habitat before the USFWS [U.S. Fish and Wildlife Service] identified it as such and imposed restrictions." (L. McKinney 1993).

Clearly this is not how the Endangered Species Act should function. There are other (more isolated) instances of landowners intentionally harming species to regain control of their land (Stroup 1995). The law does not intend to harm species or create animosity towards both the law and the species it protects (or is considering to protect), and should be changed to reflect this fact.

How Incentives Can Help

Using economic incentives to promote environmental protection is a familiar idea. Many of the federal plans for clean air and water incorporate incentives to reduce pollution (F. Anderson et al. 1977). Although these have worked to varying degrees of success for air and water quality, the moment is ripe for using incentives to protecting endangered species. Incentives will help to offset some (but not all) of the costs of recovering endangered species.

As it stands now, unfortunate landowners must carry all of the burden of protecting endangered species, while the benefits go to everyone. The public can not be expected to pay for all of the costs of protecting species on private land, but they could forge a more equitable arrangement when it come to protecting species on private lands.

Another positive aspect of incentives is that they would encourage more cooperation in the planning process. If involved parties have something to gain by participating in conservation planning, they will be more likely to do so than if the only motivating force is punishment. This reduces the polarization that puts both `sides' on the defensive, often to the detriment of the species involved.

With the current situation, landowners behave to maximize their economic gain while minimizing their punishment (as is expected from the punishment-punishment options that landowners face). This translates into harm for endangered species and their habitat, which is only be protected by desperate legal actions of `extremist' environmentalists or sanctions from ineffectual government agencies. Incentives can help to make sure that all parties are satisfied, and increase the amount and effectiveness of conservation efforts.

Incentives for Protecting Biodiversity

What exactly are the incentives that could be used to protect endangered species and ecosystems? A number have been suggested, and a brief synopsis of the available options follows, describing how they can be effectively employed in the struggle to protect biodiversity. The references will be helpful for finding the finer details of the incentives described as suggestions for other incentives. The description of each incentive is followed by a discussion of prior experiences with the incentive (if any), benefits that the incentive will have bring, the cost and possible sources of funds for the incentive, and an overall prospect for its success.

Abolishing Disincentives

The most significant step that can be taken to use incentives for protecting biodiversity is abandoning the so-called perverse incentives which benefit those who do not conserve (or punish those who do). There are several examples of them, but there are two that are especially important.

The first would be to do away with the government's power to regulate the use of lands that they do not own. This would remove the economic advantage that those who damage habitats (or have no protected habitats) gain over those who follow the rules. Of course, this would also get rid of the rules, so additional measures would need to be in place to prevent damage to habitats. This could be in the form of economic incentives for conservation or fiscal sanctions against those who deliberately damage habitats (Stroup 1995).

The second important perverse incentive that must be addressed is in the distribution of public natural resources. Under the current arrangement, the government sells public resources at below-market prices to exploitative users. Conservationists wishing to preserve these resources are locked out of the market, as non-use results in forfeiture of the rights. The most disturbing aspect of this is that the government loses money on the deal--it is a taxpayer-subsidized exploitation of public resources. Also, over-use of the resource right is silently encouraged as it will lower the price for that resource right in the future.

Passing laws to open the closed markets for resource rights will be a big incentive to conserve. Private organizations could conserve public resources as well as private ones. Also, by requiring that public resource agencies charge fair market value and operate on their profits, the incentives to over-exploit public resources will be reduced (O'Toole 1993).


The benefits to be gained by eliminating perverse incentives are numerous. Obviously, removing punishments for those that conserve is a large help to the protection of endangered species, whether in the restriction of land use options (due to past positive habitat modifications), or in the exclusion of conservationists from resource markets that they are interested in. Rewarding those that deliberately practice unwise land use strategies is another mistake that is easily corrected by eliminating disincentives.


The costs of making these changes would be next to nothing. Obviously it will cost something to reward landowners who conserve. These rewards are the other incentives that are discussed below (their costs are not too unreasonable for the most part). It could be a source of income for the government to financially punish those that deliberately destroy or usurp resources, and could use these profits to help offset the costs of positive incentives. The government could also gain supplemental `free' income from those that buy rights for the sole purpose of not using them.


The prospect for eliminating disincentives should be very hopeful. This seems to be the case with removing restrictions on private land use. Whether a system of economic motivations will be around to replace these regulations is another story.

The disincentive of closed markets for government resources, will be much harder to change. Resource users have been operating with this subsidy for ages, and have an entrenched political voice for the continuation of such policies. (If their voice was at all weak, these laws would have been changed a long time ago.) Only with significant public pressure can these disincentives be removed.

Voluntary Measures

Encouraging voluntary conservation of natural resources can be a remarkably effective conservation tool. There are three main components to such a program. The first step is contacting landowners who may have endangered species residing on their property. Then, if protected species are found to reside there, information and assistance is given in order to help the landowner protect the species on her property. If the landowner is willing, an agreement is signed stating the intention to protect the species found on the property.

Such an agreement would be non-binding (reversible at any time). Landowners would not be financially rewarded in such a program. Instead, they would receive public recognition, technical support, and the satisfaction of having `done the right thing'. A line of communication would be opened and could be used as an inroad for other interests (biological surveys, conservation organizations, etc.)


There is currently a volunteer program operating in Wisconsin, and it appears to be quite successful. The Landowner Contact Program run by the Wisconsin Bureau of Endangered Resources does just that. One person, working 3/4 time, contacts landowners who may have endangered species on their land and sends information on the species in question. If the landowner is willing, a Memorandum of Understanding is signed, which states a general intention to protect the species living on the land.

The Program then serves as a liaison between the various government agencies involved (federal, state, local) and the landowner. The landowner receives a certificate of recognition and a watercolor of the endangered species benefiting from the agreement, as well as a steady supply of information on its conservation. Assuming that the landowner agrees to help and does so in perpetuity, voluntary agreements serve all interested parties well at almost no cost (Desimone 1994).


A certificate or plaque may be all that is needed for landowners realize that their conservation efforts are appreciated. Volunteer encouragement helps to show that conservation requires a landowner's choice in how the land is to be used, and that protecting species can not be demanded of landowners. Another potential value of volunteer programs is the positive relationship they establish between the government and landowners. This relationship is important for future communications with the government, and can be used by other interested parties (private conservation groups, for example).

Volunteer programs help landowners protect species with both the information and the technical assistance of other agencies that they could dispatch. Many small landowners are willing to help endangered species, but don't know how to `do the right thing'. Volunteer programs can accomplish this.

This volunteer approach will work best with small rural landowners, who are typically conservation-minded (having a long term commitment to the land while reaping some benefits from it). They often are willing to conserve land, provided that they have the ultimate choice over the decision to conserve, and are given clear, consistent advice on how to carry out their responsibilities.


The costs of volunteer programs are minimal. Even shrinking budgets can find a way to pay for the small staff and small overhead of such a program. Politicians will find no trouble in justifying the costs to taxpayers, and could make them point of political pride. If government organizations lack funding, private conservation organizations may be able to help defray the costs, as a substantial investment is unnecessary.


There are two major problems with the low-cost volunteer approach. The first is that past experiences with the government and endangered species may make landowners wary of friendly contact. They could possibly perceive a volunteer programs as a covert plot to take control of their land (or to get them to pay for the complete costs of conservation).

Another drawback to this approach will be the coordination of incentives if stronger incentives are to be used for similar purposes. Small landowners would be angry (and would not participate) if nearby larger landowners were compensated monetarily for their conservation efforts while they were expected to volunteer. This must remain a consideration in designing a comprehensive system of incentives to protect biodiversity.

Despite its drawbacks, volunteer programs may be an effective choice in many circumstances. They should provide a long-lasting, amicable, and flexible relationship with landowners at very little cost. In addition, they are easy to implement, cost virtually nothing to start, and are flexible enough to suit the needs of most small landholders. Should they prove themselves ineffective, they would be just as easy to discontinue. Considering the numerous possible benefits and their low cost, it is a wonder that more volunteer conservation programs have not been initiated.

A Biodiversity Trust Fund

Protecting imperiled species can not always be a low-cost operation. A substantial amount of money will be required to adequately recover troubled organisms, and to prevent naturally rare species from endangerment. It would be convenient to accumulate a large pool of funds dedicated to conservation purposes. This endowment would have a board of trustees who would oversee the allocations of funds, and would distribute it to maximize the benefits for endangered species.

There are essentially two main sources that these funds could possibly come from: government and private contributors. Most of the proposals for trust funds rely a great deal on private donations to accomplish their goals (Baden and O'Brien 1993, O'Toole 1993). Some plans argue that government should not be involved in such a fund, or on a very limited basis. Baden and O'Brien (1993) claim that "revenues from public land activities...could also be allocated to the trust funds, but it would be unwise to do so without extreme sensitivity to the problems inherent in government support." This is a noteworthy consideration, as securing public funds is an intense political battle, and any funds allocated may be highly unreliable.

A biodiversity trust fund could be set up on a local, state, or national scale, and would have an unlimited variety of conservation options that it could choose to support. These choices would include: purchasing land to establish preserves, purchasing conservation easements, paying bounties for endangered species on private lands, buying conservation contracts, offering grants or low-interest loans to conservation projects, and conducting research (with a small, fixed percentage of the fund) (O'Toole 1993).

The trustees would be appointed based on their experience in conservation activities and their ability to decide how the resources are to be divided among the various projects that they wish to promote. The board could conceivably consist of conservation-minded business leaders, environmental activists, ecologists, conservation biologists, and government officials (should government funds be involved). The nominations could be made by elected government representatives, or perhaps by scientific organizations such as the National Academy of Sciences (O'Toole 1993, Baden and O'Brien 1993).


There are many biodiversity trust funds already in existence. These are private conservation organizations such as the Nature Conservancy, Defenders of Wildlife, the Worldwide Fund for Nature (the World Wildlife Fund), the National Wildlife Fund, the Audubon Society, and several others. Funds for their activities have come entirely from private donations, and have been put to good use. In 1994, these organizations received well over 500 million dollars (table one). Because these organizations rely on private funding sources, they often find that there are more worthwhile projects than money to spend.

These organizations have gone a long way to protect biodiversity, and have good results to show for it. Although their ambitions have been limited by the funds that they have available to them, they have a strong track record, especially when it comes to getting the most out of their money. Another way that private conservation groups have excelled is in their innovative ideas. Unlike government agencies, they are willing to try and use creative approaches if they believe that they will succeed.

Table One
Revenues of the Ten Largest U.S. Conservation Organizations
(millions of dollars)

Organization                	  1994 Revenues
Conservation International        	 $11.2
Environmental Defense Fund        	  21.9
Greenpeace USA                    	  40.7
National Audubon Society          	  43.4
National Wildlife Federation      	  87.7
Natural Resources Defense Council 	  17.0
Nature Conservancy                	 216.2
Sierra Club                       	  43.2
Wilderness Society                	  16.5
World Wildlife Fund               	  55.9
Total                             	$553.7
Source: Edwards (1995).


There are several important benefits to be gained with a biodiversity trust fund. The large amount of money accumulated will allow for a greater number of relatively expensive recovery plans to be at least partially realized. The `blank check' format of the fund will allow for greater flexibility in the available options. The trustees will have the power to try experimental ideas in conservation, but will always work to maximize the power of the resources they have available.

Factoring the costs of conservation into the equation (following a thorough scientific inquiry) will ultimately help an imperiled species. With the Fish and Wildlife Service's current shoestring budget, very little money is available to actually implement the recovery plans that are formulated. Consequently, little attention is paid to the efficiency (cost-effectiveness) of a plan, and costly, unrealistic plans are the result. Putting recovery on budget admits the shortcomings of the current situation, and will encourage more effective approaches to saving species.

The final major benefit of a trust fund is the group of people that can become involved. The trustees can be drawn in from private conservation organizations, and will have the experience and good judgment to manage the fund wisely. This will help to ensure the effectiveness of the program. A politically isolated trust fund could also enjoy the benefit of more objective scientific opinions, which are sometimes swayed by political pressures in the current system. Given a reasonable amount of funding, these advantages will ultimately serve biodiversity better than the current system.


The cost of a nationwide biodiversity trust fund would be staggering. To be effective, it would require an annual balance in the neighborhood of at least 1 or 2 billion dollars, perhaps more. The estimated prices of recovery plans frequently exceed 100 million dollars, and the species requiring recovery number well into the thousands. Finding sufficient sources for these funds will be a difficult task in today's federal budget crisis.

Significant government funding will probably not be available. The only feasible source of government money is a percentage of public user fees earmarked for the trust fund. This would require that the government agencies responsible for natural resources would have to charge fair market value, and would not be allowed to operate on a deficit (O'Toole 1993). Common sense tells us that this should be the case, but getting this message to Washington D.C. may prove to be difficult.

The only other major sources of income for a trust fund are private contributions. Again, there will be a challenge in raising sufficient funds for an effective program. Conservation-minded individuals are already giving a large sum of money to private conservation organizations, and can not be expected to donate much more than they already are. Getting those that are ambiguous or against conservation to donate will be even more difficult task. Making the contributions tax-deductible could help, but that will again raise the problem of gathering political support. In other words, funding will be a major hurdle for a national trust fund.


A conservation trust fund could potentially be extremely effective, however its main stumbling block is a familiar one: money. User fees from recreation and/or extractive use of natural resources (timber mining, grazing) combined with private donations could raise enough money to start the trust fund. Whether these funds can be sustained is another matter.

In one study, over 80 percent of Americans surveyed said they were willing to pay over $100 annually for the conservation of old growth forests (Hagen et al. 1992). Assuming that people are actually willing to pay that amount, $22 billion ($100 x .80 x 275,000,000) could be available to start a biodiversity trust fund! This figure should be taken with a grain of salt--it is probably overly optimistic, and there is no guarantee that it would be a continuous source of funding.

Even if a national fund is not feasible, a similar trust fund could be started with less money on a regional/state/local level. Given a modicum of funding, and people working to make the most of it, a conservation trust fund can conceivably work as well or better than its non-profit prototypes.

Tax Breaks for Endangered Species

Tax incentives have had a long history of promoting worthwhile activities, and there is no compelling reason why they cannot include conservation. Indeed they do; most donations to private conservation groups are tax-deductible. Property owners that harbor endangered species do not receive this benefit, however. Private landowners are often forced to make substantial contributions to endangered species conservation, however this government-mandated donation is not tax-deductible (Stroup 1995).

At the very least, the property tax code could be modified to reflect the actual value of lands being conserved (by choice or regulation). The current `best use' valuation that is assessed is unfair punishment to those that are trying to help with a common public goal. Inheritance tax reform could also be employed in the interests of conservation. An exemption could be offered to heirs until they sell or negatively modify inherited lands. This would help prevent the fragmentation and development of large tracts of land. Allowing landholders to take deductions for conservation expenses incurred by Fish and Wildlife Service regulations is another strong possibility (J. McKinney et al. 1993).

Other tax changes could discourage destructive land use practices such as development and natural resource extraction (timber, minerals, water, etc.). The much needed revenue generated by these new taxes would partially go to pay for other conservation programs (J. McKinney et al. 1993).


Currently, there are no examples of a tax break for individual landowners directly conserving protected species (or for complying with the Endangered Species Act). Those who choose to conserve through a non-profit organization receive a tax break, however, regardless of whether or not endangered species are involved. It is only fair that this tax break be extended to those who choose to conserve on their own.


Obviously, tax incentives can be an important motivating factor in conservation. Even if landowners (or other concerned citizens) do not totally recover their costs, the reduced costs will make conservation a more attractive proposal. This is especially true when landowners are made to comply with Fish and Wildlife Service regulations. Also, the possible tax shelter could encourage others to invest in land for conservation purposes rather than development. A tax penalty for irresponsible development of important habitats could help reinforce this incentive.


The costs of conservation tax incentives are paid by the government, which must either adjust to the lost revenue, increase taxes, or go deeper into debt. This translates into increased taxes, decreased services, or both. Contrasting this is the current situation, where landowners must bear all of the costs of protecting species. Tax incentives will not appreciably change the costs of conservation if applied properly (i.e. abuse-proof). They will bring about a more equitable system of payments sources between the property holders and taxpayers.


Tax incentives will reduce, but not eliminate the costs that landowners face in protecting imperiled species. This will reduce the motivation to destroy or degrade important habits that cause financial hardships. There are two major stumbling blocks that tax incentives will face. The first is that tax code is very complicated, and a great deal of acrimonious debate will go into changes that are either not adopted or short-lived. This political reality is highly incompatible with long-term conservation planning. Also, recent proposals have called for a simplified tax code; a flat tax with no deductions. Conservation tax incentives would be virtually impossible under such schemes.

Secondly, taxes are such a good incentive that they often encourage people to cheat or fudge in their efforts to minimize tax liability. A rather large difficulty will arise in making sure that only those who qualify receive the benefits that tax breaks offer. Standard tax penalties would need to apply in cases where people use conservation to evade tax liability, and additional penalties might be levied and devoted to conservation efforts.

Taxes have proven themselves to be a powerful motivator in determining behavior--just ask Leona Helmsely! Because of this fact, it will take some thinking to subsidize conservation with tax incentives.

Bounty `Hunting' Endangered Species

Bounties and other cash rewards have been another suggestion for encouraging endangered species conservation on private lands. Under this system, private landowners are given a reward (in the range of thousands of dollars) for every new individual/breeding pair of an endangered species found on their land. Alternatively, instead of a one-time reward, the government or other organizations can pay `rent' for land that is occupied by endangered species. A variation on this theme is the insurance approach: compensating landowners who directly suffer losses (in crops or livestock) due to ill-tempered individuals of endangered species.


A bounty program has been implemented by Defenders of Wildlife to coincide with the reintroduction of grey wolves in and around Yellowstone National Park. Ranchers fearing livestock losses due to wolf predation led Defenders to believe that wolves would not receive a nice homecoming. However, their program makes it so. Any rancher who can document a loss of livestock due to wolf predation will be compensated. Defenders of Wildlife also offers a bounty of $5000 for any wolves successfully breeding on private land (Desimone 1994). Similar programs could easily be applied to other species (T. L. Anderson 1993).


Bounty programs as they are currently proposed are not intended to be a species' only hope for recovery. Rather, they are meant to be used in conjunction with other programs to improve and conserve habitat for endangered species. A bounty will work well when there is considerable animosity or fear towards endangered species and their recovery efforts. The greatest possible benefit of a bounty program is that the monetary reward will cause landowners to go out of their way to create and improve habitat for endangered species. This is definitely a remarkable improvement, considering that at best, most landowners deliberately let their endangered species habitats degenerate when faced with the burden of government regulations (Stroup 1995).


Bounty programs are not prohibitively expensive. The costs could range from tens of thousands of dollars into the millions. The source of the funds is an issue, however. While private organizations can scrape together the funds carry out such programs, they are often put to better use by more concrete efforts like purchasing conservation easements or land. Should it exist, a national trust fund could devote some of its money to bounty programs. Also, if funding for existing government conservation agencies miraculously increases, they could provide limited support for bounty programs.

Another possible source of funding for a compensation fund is an agricultural damage insurance company. Here, ranchers and farmers would pay a small premium (perhaps combined with outside funding) to guarantee reimbursement of predation losses, to endangered or other wild species.


A bounty program can be effective for those landowners who possess the ability to conserve or tolerate endangered species, but do not because of a negative impression of certain species (past regulations restricting land use, reputation of listed organism as a `bad neighbor', etc.). The main limit to its effectiveness is the amount of money available for rewarding the landowners.

Another potential drawback is that such programs would be rendered ineffective in areas of high development pressure--the gain available for `cashing in your chips' would far outweigh the benefit from an endangered species bounty. For these reasons, this program will work best with rural landholders (like a stronger version of the voluntary incentive effective in more specific circumstances).

Bidding for Conservation

A major disincentive that has hindered conservation of public lands is the Bureau of Land Management's `use it or lose it' policy. While this principle maximizes revenue, it also encourages the exploitation of many public natural resources (especially overgrazing). Users have an incentive to overuse, as it lowers their future costs. Allowing private individuals to bid for the rights to not use or improve public resources will open up important habitats for conservation purposes.

There are two possible scenarios that one could imagine with such a policy. To avoid competition with the regular users of public resources, the overseeing agencies could offer unused or unwanted lands specifically for conservation purposes. These lands would be offered at a lower rate than is typically charged to users, and would pose no problems in that the lands actually are of lesser value except in their conservation.

An example of this would be auctioning conservation rights to lands inhabited by spotted owls in old growth forests. Timber extraction would be illegal (or astronomically expensive if done legally), so it would have little economic value. These lands would have great conservation value, however, and could be leased at a discounted rate to organizations or individuals who wish to improve the habitat for the protected species inhabiting it.

The other approach would be to allow open bidding for the conservation of useful lands. Environmental organizations would compete directly for resource rights with the individuals and businesses that have traditionally extracted resources (T.L. Anderson 1993, Stroup 1995). This will make the market for public resources truly open, giving a voice to the historically muted interests of endangered species. Opening the market to more diverse interests would be a definite improvement, and the battles between conservationists and those that exploit resources would be fought at the auction block, not the courtroom.


The best example of this incentive is seen in New Mexico. Here, Forest Guardians leases substandard streamside grazing land from the State Land Office. They are currently leasing about 2,000 acres of land from the state for five years, at 49 cents per acre per year. This is about one-third the cost that ranchers pay to graze cattle on the same land.

This arrangement benefits ranchers, the government, and environmentalists alike. The ranchers, whose past grazing damaged the land past utility, get the land restored to top condition for free. Of course, ranchers will have to pay higher rates for the improved land and may eventually have to compete for range land with conservationists. The state supplements their income by receiving revenue for unused land. Also, the government will collect a higher rent in the future should they decide to graze the improved lands. Forest Guardians (funds permitting) can lease the land in perpetuity, protecting a small parcel of important riparian habitat.


The benefits realized by this local non-use arrangement would remain the same in other situations as well. Leasing rights for non-use would be a supplemental source of income for the Bureau of Land Management and other agencies which auction resources. The government could receive a steady stream of additional income by leasing resource rights or conservation rights. The resource is preserved and possibly even improved should the need to harvest it arise in the future. The traditional resource users would benefit from the improvement of resources and the realization that they do not hold a monopoly in a given resource.

Conservation organizations and environmentalists would gain from the satisfaction of having preserved a community resource for future generations. Although they receive this benefit in most of the work that they do, it is a resource that may have been depleted or destroyed without their intervention. Also, the cost of leasing land is much less than purchasing it, even over the course of decades or centuries.


The costs of bidding for non-use would be minimal for all parties. The government resource agencies that typically operate at a loss would actually generate revenue. Conservation organizations could potentially save money by `acquiring' lands for a fraction of the cost of purchase. Resource users would probably face a small increase in costs. As is customary, these would be passed on to the consumers who would pay more for meat, forest products, and minerals. Wealthy conservation-minded citizens could also be a source of funds themselves, bidding for the right not to use a resource.


Open bidding can and should be extended to federal lands and resources. No party involved stands to lose considerably, and it will help federal agencies to earn profits instead of running deficits. Non-use bidding can be easily incorporated into the sales of grazing, timber, mineral, water, and other natural resource rights.

It will be no cake-walk to implement this incentive. A change in legislation will be necessary to allow for this new policy (T. L. Anderson 1993). Such a policy change should be easy to implement, given the prospect of increased government revenues. Irrational fears that environmentalists would lock up all available public resources would probably need to be alleviated as well. Although public land users could expect to see an increase in prices and a decrease of availability, conservationists would most likely choose lands that had high conservation (and hence less economic) value.

Resource users could also take advantage of such policies. Companies could potentially lease land for conservation in fulfillment of their mitigation requirements of the Endangered Species Act. Under section 10 of the current law, private citizens or companies can only "incidentally" take endangered species habitat if they improve a greater habitat elsewhere. Leasing land and improving it as habitat for protected species could qualify as mitigation for temporary `incidental harm' to habitats elsewhere

Contracting for Conservation

Contracts have been negotiated with private companies in virtually every government activity except conserving endangered species. Under current law, only federal employees are allowed to capture and handle endangered species, and assist in consultations for Habitat Conservation Plans. This does not have to be the case. The government could offer private companies and non-profit conservation groups the rights to carry out specific activities that are within and beyond the scope of appropriate government organizations.

For example, the federal government could sell exclusive handling rights for certain protected species. Concerned organizations could buy these rights, and conduct independent recovery activities such as captive breeding and reintroduction. Businesses could also buy these rights and sell recovery services to developers or others adversely affecting endangered species that need to fulfill their mitigation requirements under section 10. Also, benevolent conservationists could hire a recovery firm to help the recovery of an endangered species (Schildwachter 1995). The government would need a system to monitor the activities of individuals purchasing recovery rights, ensuring that no net harm is done to a species.


Conservation contracts would potentially benefit all parties involved. The stressed government agencies (Opdycke 1993) will have some of their burden lifted. The understaffed Fish and Wildlife Service and National Marine Fisheries Service could delegate their current authority to competent individuals, saving time and money. They would also be freed from the responsibility of undertaking and carrying out a recovery effort, and could concentrate more on listing species and planning recovery efforts on private lands.

Developers and companies could hire one recovery firm to do everything for them. They would no longer need to spend excessive time, energy, and money on taking a biological inventory, independently planning with the Fish and Wildlife Service, and carrying out that plan. This will potentially lower costs, and open the Habitat Conservation Planning process (a prerequisite to allowing `incidental harm' under section 10) to smaller landholders and businesses. Currently only the largest companies can afford to undergo the planning process, but firms that handle all aspects of recovery could accommodate more diverse interests into the process.

Conservationists would benefit in the very least by knowing that the recovery effort was carried out to high standards. Also, if they possess the funding to get involved, they could help species beyond the minimum amount required by the contract. Another indirect benefit to environmentalists could come from the fact that a single authorized company handling the recovery of protected species in a given area could develop and implement a more comprehensive recovery plan by pooling the conservation needs of several corporations, developers, etc.


Assuming that the government would be unwilling to hire contractors to protect endangered species, the costs of a franchise contract program would be no more than are currently incurred. By consolidating recovery steps (biological surveys, planning, and implementation) costs could probably even be lowered. Also, the competition created by an open market will serve to lower the prices of or improve the quality of the recovery plan. Small businesses and private landholders could better afford to become involved in conservation planning.

Private non-profit conservation organizations could face difficulties in funding a conservation contract. They would probably have to scrounge to find money to buy the recovery rights of a species or recovery contracts would come at the expense of other projects. On the other hand, they are accustomed to raising money for special activities, and could choose to make contracting recovery of species a priority if they felt it would be worthwhile.


The government sale of rights to preserve endangered species has some promise as a viable option for conservation. This strategy could be useful in a wide variety of situations, especially where high development pressures create the need for mitigation, as well as the funds possible to do so. Selling recovery rights have the potential benefits of lowered costs and improved services, as well as a lowered burden on overworked government agencies.

It should not difficult to change the Endangered Species Act to allow the sale of conservation rights. Although it would be a political battle, the change would generate revenue for the government, and lessen the responsibilities of stressed government agencies. Politicians would be hard-pressed to argue against such changes.

Surprisingly, recovery rights will probably be hardest to sell to conservationists in more ways than one. It will increase their costs, and bring up the touchy issue of `owning' nature as well. The selling point for environmentalists is that recovery rights will increase their options. Also, contracting ensures that recovery will be done as well as or better than the government can currently do (punishments can be implemented for unscrupulous contractors). All in all, this can be a workable idea in a well-rounded system of incentives.

Tradable Mitigation Credits

Another idea with potential value for situations of high development pressure is a tradable development/mitigation credit system. The general idea of such a program is to steer development away from significant ecosystems, and towards lands of less ecological importance. This system will automatically discriminate between lands that have high conservation value (low development potential) and high development value (low conservation potential).

The specifics vary between proposals, but generally it would work by establishing a preserve in the most critical habitat of the area slated to be developed. Then a maximum percentage of the remaining land to be developed would be set. The non-preserve land is then given a habitat value (which determines whether it will be developed or conserved). A mitigation ratio is then set according to the amount of land allowed to be developed (for example if 25 percent of the area is to be developed, 3 acres of land must be conserved for every one that is developed--a 1:3 mitigation ratio).

Developers would then commence to build, and must either conserve some of their land for mitigation requirements or must buy the excess mitigation credits of other developers (whose land was of greater habitat value than building value) (Olson et al. 1993). Builders would also presumably possess the option of trading actual lands, not just the credits from how they were used.


Such mitigation credit systems are already working in the form of a wetland banking system. This idea has been incorporated by the New Jersey Pinelands Commission in long-term habitat planning. "Pinelands has a central core of preserved lands..., a protected area where relatively benign commercial activity is allowed..., and designated growth areas" (Goldstein and Heintz 1993).

A Development Credit System was then put in place to allow trading of credits between those in the preserved regions and those in the other regions. Voluntary preservation of lands in preservation areas earns credits which can be sold to developers, who can increase the density of their housing projects by buying an appropriate number of credits. Though this scheme relies on the initiative of residents in preserving parts of their property, almost 10,000 acres of land have been protected in the ten years since its inception (Goldstein and Heintz 1993).


The benefits of this approach are obvious. The costs of conserving land in high development areas are spread equitably among all developers; they are not paid solely by the poor speculator that got `stuck' with endangered species land while the developer next door makes millions.

This foresighted approach will help prevent the fragmentation of critical habitats caused by haphazard development which avoids only isolated patches of endangered species. Sound preserve design requires a minimum preserve size to reduce the likelihood of extinction. It will do no good to have several small preserves surrounded by houses if the protected species inhabiting them all die out. The few large, connected preserves established by mitigation banking will maximize the chances for survival of the species living there.


This system distributes the cost of conservation more equitably among all developers working in a sensitive area. Overall, the cost is the same as in any other development project affecting endangered species. By giving value to `worthless' land inhabited by endangered species, unfortunate landholders recoup some of their investment, while more fortunate developers must share the responsibility for conservation.

The homeowner who moves into the development will ultimately pay the costs of protecting the endangered species that they live near. Although mitigation banking cannot reduce the absolute costs, this arrangement spreads the cost more evenly without creating a new burden on the taxpayers.


This plan admits the inevitability of development, and in a sense makes the most of a bad situation. It also prevents the bankrupting of those developers who have unknowingly purchased prime endangered species habitat. A system of tradable development credits realizes important biological ideas, and maximizes the chances for survival of the affected organisms. It requires no changes in legislation to implement itself, and could be an integral part of a large-scale recovery plan. Mitigation credit systems should be used in any case where high development pressure threatens the viability of unlucky landowners and endangered species alike.

Pay to Play in Buffer Zones

Fees for recreational use of natural resources can be an important tool in conserving natural habitats. By receiving a tangible benefit from natural areas, people are more inclined to conserve them. This has been observed repeatedly in third world nations, as well as ours (McNeely 1988). Fee use emphasizes the importance of sustainable resource use over short-term economic gain from rapid depletion, contraverting the notion that public resources are a commons (which often leads to over-exploitation of these resources).

Fees charged for the use of public resources can come from a number of sources. Recreation would be the most important source due to the sheer volume of people using a given resource. Increasing the charge by a small amount can also generate a large revenue if enough people participate. Also, harmful over-use of natural areas will be lessened as the increase in cost discourages some would-be visitors.

Fees are also charged to industrial users of public resources. These users could be charged more, as they generally receive these commodities for much less than market value. In fact, the government consistently runs at a loss selling many public resources (O'Toole 1993). Increasing the costs for these could go to offset the maintenance

Costs for the public resources they take advantage of. Also, additional monies could go into conserving areas which are not open to use.

The ideal situation as I envision it is that hunters, fisherman, hikers, campers, and limited industries would have access to lands in a buffer zone that surrounds habitat for protected species. The fees collected from such activities in the buffer zone would go to enrich the all of the lands of concern. Some of the costs would go to collecting and enforcing the fee system, but the vast majority would return to the land, ensuring that the recreational experience is worthwhile for the customers, and minimizing the impact of their activities.


Fees are already in place for some activities in natural areas, such as fishing and hunting licenses, and are becoming increasingly popular--some states are now charging to use their state parks. The fees charged are generally underpriced compared to similar experiences on well-stocked private lands (Kay 1986). Although these funds do not always get back to the ecosystem that collected them, the precedent of fees for natural resource use has been set.

On private lands, there are burgeoning industries of `fee hunting' on big game ranches. Here, sportsmen pay up to $10,000 for a hunting trip with a good prospect of success. Landowners deliberately enrich the land to attract and support big game, which in turn increases the income they earn (Kay 1986). This idea can be adapted for public lands as well, and could support improvements in endangered species habitat.


User fees for recreation and industry can provide numerous benefits. Users will profit from their experiences if not from the physical resource. It is a system that will be self-sustainable or even profitable, turning the revenues over to improve the resource. Also, because the continued existence of the resource is a requirement of this system, it has good prospects for continued success. This fact makes it relatively easy to include protected species in the design of the program.


The costs of such a system are born by the users, not the taxpayers. This will be a relief to the strained budgets of government agencies. The costs should prove to be acceptable for the majority of the users. Those who could not afford to pay could be granted a sustenance hunting or fishing license when such activities are a necessity for food. Another way to accommodate relatively poor resource users would be to charge different fees for different quality resources (lands with low game populations would have little or no charge to hunt them).

This could also prove to be a hidden tax on businesses, who would unwittingly foot the bill for conservation. Many businesses (especially in the western U.S.) entertain clients with outdoor recreation experiences. The costs are often paid by the company as a business expense. Little notice would probably be taken if a $3000 guided fishing trip became a $3500 fishing trip with added conservation fees.


User fees have a strong prognosis as an effective tool for conservation. They are self-sufficient, which is central to the idea of conservation (a benefit is gained from low-level use of protected natural resources). Also, they can be used to regulate the level that the natural resource is used at, averting the `tragedy of the commons' (with a free resource, everyone usually takes more than their fair share). In summary, it is a wise choice for a conservation strategy.

The main obstacle to such a system is that governments have learned to use the fees to supplement the public coffers. This does nothing to help the productivity and beauty of the land that raised the fees and is a discriminating tax on those who appreciate our natural resources. If implemented properly, user fees from recreation can be an effective way to protect large areas of public land and encourage sustained use of the resources they offer.

Land Swapping

A common complaint of landowners is that the regulations to protect endangered species amounts to a taking of private property without compensation. Land swapping attempts to solve this problem by compensating landowners for lands `stolen' from them by endangered species and their habitat. The landowners would receive federal land which is usable, and hence more valuable, in exchange for unusable endangered species habitat (Yager 1993).

In its basic form, rather than the U.S. Fish & Wildlife Service coming in and enforce regulations on the property, they would offer to trade a piece of federal property of equal value for the critical habitat. This does not necessarily have to be a government operation either, non-profit organizations could also buy and exchange desirable commercially usable property for critical habitat with greater conservation value.


An agreement was recently reached between the Aerojet-General Corporation and the federal government to trade usable lands for endangered species habitat. They agreed to trade 2,000 hectares (5,000 acres) of private Florida Everglades wetlands for 11,000 hectares of the government's Nevada desert as well as a 99 year lease on 5,700 additional hectares in Nevada.

The federal government is planning to sell the wetlands to the South Florida Water Management District for controlling water resources, and the proceeds will be used to expand two wildlife refuges in the area. The Nevada property now in the hands of Aerojet-General has 7,000 hectares set aside for protection of the desert tortoise, another protected species. The trade should work out to the benefit of all parties involved (McNeely 1988).


The benefits of land trades are obvious. The private landowner receives a land which is more compatible with her land use plans. The government receives a land with high conservation value, and can manage the land more freely and effectively. Endangered species residing on the land are less likely to suffer habitat destruction at the hands of frustrated landowners who want the critter gone, and may even have their existing habitat improved.


The costs of such a program are minimal. As long as the government has surplus usable land that it is willing to trade, it can take definitive control of critical habitats. However, if the exchange of property is not equal, then it could incur additional costs for one of the parties. Also, it could potentially take usable land out of the hands of those that regularly lease it from the government if the government becomes short on available lands.


The prospects for using land swapping as a conservation tool seem bright. The government has plenty of useful land sitting around while its agencies dictate how private land is to be used. A land trade can satisfy all parties involved at no cost to the taxpayer, making it a popular program for politicians.

Executing the trades will prove to be the biggest problem; Congress had to approve the Florida-Nevada trade described above through legislation. A change in law would be necessary to give the Fish and Wildlife Service lands and the authority to trade them if trading was to be done frequently. Nearby lands may not be available for swapping as the above case also illustrates. Despite these difficulties, it should be an effective incentive if given the chance.

Paying the Stool Pigeon

The idea behind this incentive is to reward individuals who help enforce the penalties of the Endangered Species Act. People who observe others intentionally doing harm to protected species or their habitat would be eligible for a cash reward if they report activities which resulted in a fine and/or conviction. The reporter perhaps would receive 10 to 25 percent of the fine collected, or a flat fee if a fine is not part of the offender's sentence. A hotline could be set up and posted on signs that announce the presence of endangered species. This program could be easily incorporated into the existing law.


Rewards for informants have long been a part of law enforcement. On a local and national level, reward hotlines for reporting criminals have been a welcome addition to the traditional methods of law enforcement. There is no reason why this idea cannot be applied to endangered species law enforcement as well. There are very serious criminal sanctions to those found guilty of deliberately harming (maiming, shooting, etc.) protected species, so a reward program for information on violations should not be out of the question.


Rewards for reporting violators can be helpful in a number of ways. It reduces the demands on the Fish & Wildlife Service to enforce the law. And it also increases the probability of violators getting caught, serving as an effective deterrent to would-be wrongdoers. An important observation is that poachers of protected species consider both the penalty and the probability of being caught in their illegal behavior (McNeely 1988).

Rewards could also encourage people to come forward about violations in the workplace, who are fearful of being fired or harassed about their honesty. Another potential benefit is in securing support for endangered species. Many local people hate endangered species with a passion (witness all the spotted owl recipes concocted by out-of-work loggers). This may change when they see the chance to make some money by helping endangered species. Even if they never actually receive a reward, the possibility could instill more respect for them.


The expense of a reward program is minimal. Very little additional staff would be needed to implement such a program. If the financial reward comes from the revenues raised by fines, no additional funding would be required. If the number of convictions increases because of such a program, the program could possibly prove to be a source of revenue. Should funds for the rewards come from recovery budgets rather than fines collected, then the reward system may come at a net cost to the species that is to be protected. Given the infrequency of large endangered species convictions, the overall costs should be relatively small.


A reward program can potentially offer a large psychological benefit for little cost. However, its mode of action is not really a true incentive, instead it merely strengthens the existing disincentives. Thus, such a program must be implemented carefully to avoid further animosity among landowners. This is definitely not a good idea for areas where the prevailing attitude is firmly against protected wildlife and infractions are common. Here, trying to buy informants could backfire and worsen the situation. The possible gain of reducing the `shoot, shovel, and shut up' method of endangered species handling must be balanced against increasing the frustrations and tensions of landowners or others adversely affected by endangered species.

In cases where an outsider is coming in and illegally destroying resources, to the detriment of the locals standard of living, this could be an effective tool (McNeely 1988). This real effect is more of a concern in developing countries where poaching is a major problem. The main benefit in the U.S. would be in the attitudes it could change. At best it should be considered a minor option. At worst, it could backfire and do harm (indirectly) to endangered species.


Incentives, if given a chance to work effectively, could be an important and effective resource in the America's efforts to preserve biodiversity. Landowners would have something to gain and less to lose by harboring endangered species and improving their habitat. A well-rounded incentive approach would integrate the various incentives available, so that landowners could receive multiple benefits from conservation activities on their lands. Any one incentive would most likely cover few of the costs of preserving endangered species habitat, but several incentives could recover a substantial portion of the

Incentives could face opposition from the environmental movement, whose `polluter pays' principle holds that taxpayers shouldn't have to pay for people not to pollute or destroy habitat. This is a valid point when unsound practices can harm everybody, however this is a two way street. When a majority of people benefit from the existence of protected species and their habitats, then they should help pay for it. There is no free lunch. Forcing private landowners to pay all the costs of conservation encourages them to not conserve, covertly destroy habitat, or manage their land to prevent the immigration of endangered species. Incentives can distribute the costs of conservation more fairly and will make conservation a much more attractive proposition.

Incentives would work most effectively in addition to the current system, which imposes penalties for degrading endangered species habitat. This will roughly double the reward for conserving (compared to not conserving). Which penalties should be kept is another question. Keeping the jail terms and fines for illegal activities on public lands would be a good idea as they would be relatively easy to enforce, and would constitute a clear violation of public will.

For private lands, it would probably be wisest to have a system of economic incentives and disincentives to promote conservation (as any blatant criminal offenses will be committed covertly to avoid detection). An economic penalty for obvious damage to habitat coupled with a partial subsidy for conserving habitat could make conservation the lowest cost option. This scenario would protect endangered species more effectively, while preserving a landowner's right to choose how his property is used.

The legislation necessary to implement such a plan could be enormous. The wisest approach would be make the current law applicable to federal lands only. The Fish and Wildlife Service would be in charge of conservation of these lands, which it has in general done a good job of (Reid 1993). A new entity should then be created to protect endangered species on private lands. This could be a division of the Fish and Wildlife Service or an entirely new agency. The only requirement is that this bureau would devote its entire attention to conservation of private lands.

This new agency would be given authority and flexibility to experiment with various creative solutions to the biodiversity crisis. Their powers would exceed those the Fish and Wildlife Service currently has (like the ability to land swap), but they would lack the power to directly control private lands. (They could effectively do so by charging extremely high permit fees for disastrous activities).

They would be made responsible for: a federal conservation land bank, trading public property for private, appropriation of a trust fund, overseeing a volunteer program, advising legislators on tax legislation that would encourage conservation, negotiating with other governmental agencies, coordinating public and private conservation strategies, delegating authority to private conservation organizations or companies, and doing other duties necessary to conserve private lands. Basically, it would be similar to a private conservation organization, with extra powers to better promote conservation as well as excellent government contacts.

Incentives show a great deal of promise for the future of endangered species and biodiversity in general. Used effectively, they will encourage conservation by private landowners, and will engender a more positive attitude towards imperiled species. They can also conceivably be employed to prevent species from becoming endangered in the first place. The flexibility and cooperative nature of incentives will help ensure their success. But if they are to work at all, we must give these measures a solid chance to prove themselves.


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